Netflix Up 6%: Q1 EPS Beats; To Raise Some Prices This Year

By Tiernan Ray

Netflix (NFLX) this afternoon reportedQ1 revenue in line with expectations and earnings per share above consensus, projecting a more muted rise in subscribers this quarter, and said it intends to raise prices in some territories later this year.

Revenue in the three months ended in March rose to $1.27 billion, yielding EPS of 86 cents.

Analysts had been modeling $1.27 billion and 81 cents per share.

Total streaming video subscribers rose to 48.35 million as the company added 4 million members on a net basis. Domestic streaming subs rose by 2.25 million members, to total 35.57 million, with 34.38 million being paid subscriptions. International subs rose by 1.75 million members to total 12.68 million subs, with 11.76 million of those being paying customers.

For the current quarter, the company forecast total streaming subs to rise by 1.46 million members, to 49.81 million, with perhaps half a million domestic subscriber additions, and 940,000 International streaming additions.

In the letter to shareholders, CEO Reed Hastings commented on the quarterly growth and forecast:

Our net additions for Q1 were 0.22 million more than prior year Q1. As we’ve discussed previously, U.S. net additions in Q2 will generally be lower than in the prior year Q2, even in a year with full year growth, due to increased seasonality. This Q2, we expect our domestic net additions to be about 0.11 million below the prior year Q2.

Hastings write that the company is contemplating some price increases on a country-by-country basis this year:

As expected, we saw limited impact from our January price increase for new members in Ireland (from €6.99 to €7.99), which included grandfathering all existing members at €6.99 for two years. In the U.S. we have greatly improved our content selection since we introduced our streaming plan in 2010 at $7.99 per month. Our current view is to do a one or two dollar increase, depending on the country, later this quarter for new members only. Existing members would stay at current pricing (e.g. $7.99 in the U.S.) for a generous time period. These changes will enable us to acquire more content and deliver an even better streaming experience.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.